Relationship breakdown after transfer of property

JOHN owns a 400-acre cattle farm.

He resides in a home that he built on the farm and has conducted a successful business for the last fifteen years.

The farm was owned by John’s father and John grew up working on the property.

John decides that it is time for him to transfer the property to his son, Peter with a view to him carrying on the family tradition as cattle farmers.

The property is transferred to Peter and his wife by way of an intergenerational transfer and a small mortgage which was taken out to build sheds on the property, is refinanced with the effect that Peter and his wife take-over the loan.

No stamp duty is paid by Peter and his wife, as this type of transaction was exempt from duty.

John does not think to protect himself by entering into a written agreement regarding his future occupation of the property.

Peter takes over the management of the business and his wife takes charge of the bookkeeping.

John continues to work and reside on the farm.

The business pays him a wage and he pays rent.

Unfortunately, five years later, John’s relationship with Peter breaks-down.

John asks Peter to sign a formal lease, allowing him to continue to reside on the property but Peter refuses.

Concerned about his future, John commences Court action.

John seeks orders from the Court that would allow him to remain at the farm for the rest of his life. He says that the transfer of the property to Peter and his wife was conditional upon him retaining a right to reside.

The Court states that the case turns on whether John’s version of the various conversations with Peter should be accepted.

Ultimately, in the absence of any documentary evidence, the Court is not satisfied that the transfer of the property was subject to any conditions and John’s claim is dismissed.

Email Manny Wood, Principal Solicitor at TB Law at manny@tblaw.net.au or call him on (02) 66 487 487.

This column cannot be relied upon as legal advice.